I am a 1/3 partner in a Software Consulting LLC. I received 120K in K1 that was classified as guaranteed payment.

I actually subcontract my share of the work to an outsourced software development company in India for 60K. Where do I report my subcontract expense? I don't know if I can treat the guaranteed payment in my K1 as 1099 and start a Schedule C. And I don't see anywhere I can enter this on Schedule E.

Obviously I don't want my LLC to find out about my subcontract activity. Yet I don't want to pay tax on 120K.

Thanks.